The Shifting Landscape of Credit: Who Pays More and Who Benefits

It’s great news for people with credit that is not so hot! The old rule was for people with worse credit that can get approved simply paid a higher interest rate or were charged more fees so the risk of default was offset. People with higher credit scores were able to receive lower interest rates and fewer fees. Now the rule has been flipped upside down. That’s right. The people with higher credit scores, which equates to paying bills on time, having lower debt-to-income ratios, are now getting the fees and higher interest rates, while the people who had late payments, higher debt-to-income ratios, are getting fewer fees and lower interest rates.

The Intention Behind the Change:

“Poorer people, particularly in minority communities, often have lower credit scores, making it more expensive and difficult to get a housing loan. Transferring the costs of riskier loans to more credit-worthy buyers is supposed to level the playing field. What does this say to our youth with regard to financial literacy? Does this encourage or discourage financial responsibility?”

Thoughts on the Recent Rule Change:

What are your thoughts about this very recent change in the rule by the Federal Housing Financial Agency? I realize this may be a political move to appeal to voters, but will it backfire? I also realize that strictly from a money standpoint, overall are there more conventional loan borrowers with better credit to begin with? If yes, then by charging more people, it simply equates to more money for the Federal Government. So, is it simply a new slick way of taxing Americans that are more responsible?

The Impact on Responsible Borrowers:

I suspend judgment on this because I have worked with families who may have lower credit scores due to medical bills and situations that do not reflect lack of responsibility or reckless spending at all, but I do ask the question, “What behavior does this change in rule encourage if people who are extremely regimented in their financial habits are penalized?”

Looking to the Future: 

And will the new behavior that emerges actually create an even bigger crisis in our future economy?

Closing Remarks:

Thank you in advance for being respectful in the comments. 🙏🏻

Fondly,
Joanna Renner
Writer, Life Coach, and The NJ Feng Shui Realtor

Contact Information:Jonaan renner
P.S. If you wish to explore your finances and your qualifications to be approved for buying a property, I invite you to reach out to me anytime with no judgment: 646-296-6864 🙏🏻❤️

—

This blog post addresses the recent change in credit rules and its potential impact on different borrowers. It raises important questions about financial responsibility, social equality, and the broader economic consequences of this change. Joanna Renner invites respectful discussion on the topic and offers her contact information for those seeking guidance in navigating these credit changes.